Global shares opened higher today after Spain agreed to an international bailout for its troubled banking system, but the market’s enthusiasm for the weekend deal quickly evaporated.
European shares gave up early gains to finish in the red, or close to it, and Spanish and Italian bank yields soared as investors considered the impact of the 100 billion euro deal to rescue Spain’s debt-stricken banks, the BBC reported.
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US stocks were in negative territory in early trading.
"Although the bailout will certainly help the Spanish banking system, the fundamental situation in Spain is the same this morning as it was a week ago,” Graeme Leach, chief economist at the Institute of Directors, was quoted by The Independent as saying.
"We are seeing a predictable short-term rally, but the future of the euro remains in serious doubt. All eyes this week will turn to the Greek elections.”
Investors are worried that the agreement reached on Saturday will add to Spain’s already heavy debt burden and make it even harder for the country to borrow money, and will eventually lead to a full bailout of the country, the Wall Street Journal noted.
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London’s FTSE 100 closed down 0.05 percent to 5,432.37, while the Eurofirst 300 ended 0.07 percent higher at 982.94, the New York Times said.
Spanish 10-year bond yields, which indicate the cost of borrowing, soared 25 basis points to 6.5 percent today, while Italian bond yields rose almost 21 basis points on the day to 6.04 percent, Reuters reported.